The commodity market has many similarities with the stock market. The main difference being that it involves trading in raw or primary products rather than manufactured goods. The two different segments in commodity trading
are the over-the-counter trades and the exchange-based trading. Again, these can be further classified as spots and derivatives trading.
There are three national level commodities exchanges in Indiaâ€”the Multi Commodity Exchange of India (MCX), the National Commodity and Derivative Exchange (NCDEX), and the National Multi Commodity Exchange of India Ltd. (NCMEX). Commodities that are traded can be broadly classified into two categoriesâ€”hard and soft
- Hard commodities refer to naturally occurring resources that have to be mined or extracted. Examples include gold, rubber and oil
- Soft commodities are agricultural products or those that are grown. Examples include corn, wheat, soybean, and sugar.
Industrial Metals :Copper, aluminium, lead, steel, nickel and zinc fall under this category since they are widely used in various industrial applications. There is a global market for all of these.
Precious Metals:These are metals of high economic value such as gold and silver. Metals from the platinum group such as ruthenium, rhodium, palladium, osmium, iridium, and platinum also come under this segment. It is not just practical to use, but their investment potential is huge, which makes them lucrative for business. Gold and silver are known as highly liquid commodities both in the Indian market as well as the global.
Energy :Crude oil, natural gas, and coal fall under this category. Crude oil is the most significant of these on the national and international scene. Developments in the oil market have an impact on the economy of nations and crude oil is considered one of the most liquid commodities on all exchanges
The daily fluctuations in the gold market, MCX crude, copper MCX, and MCX silver are all followed with great interest by a good deal of investors and traders within the country and outside.
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